The previous fiscal year ended July 1st, but we still don’t know how deeply in the hole the state ended up.
“The Division is still trying to reconcile ‘16. But on October 28th, at the next Joint Budget meeting, there will be more definitive information,” Patrick Goldsmith, director of the House Fiscal Division, told Revenue Estimating Conference members Tuesday.
Commissioner of Administration Jay Dardenne has said he expects Louisiana to be between 200-million and 200-million dollars short for FY 2016, so REC members were most interested to hear how much is available from the Budget Stabilization Fund, more commonly called the “Rainy Day” Fund.
“The balance as of July 1, 2016, was $358.9-million. And one-third of that balance is $119.6-million,” Laura Lapeze with the Treasurer’s Office stated.
Senate President John Alario asked, “The $119-million would only be available under certain circumstances, as I understand it, and it has to be a reduction in revenues from the prior years. But that would be the maximum that would be available?”
Yes, that’s all, he was told. Goldsmith then explained the two triggers for tapping the Rainy Day Fund.
“In the current year, if there’s a deficit caused by a reduction in the forecast, you can use up to one-third of the balance -- up to the amount of the deficit,” Goldsmith said. “Otherwise, it has to be a reduction in the forecast, and the forecast in the next year has to be lower that the forecast in the current year. And then you can incorporate one-third into the budget going forward for that year.”
But the revenue forecast isn’t dropping. It went up for FY 2017 by more than a billion dollars due to tax hikes passed this past spring.
And there’s another rule that would prevent the use of this money. By law, the fund can only be tapped into once every three years, and the state dipped into it this past year.